Entrepreneurs' relief should be pruned back in next week's Spring Budget, the Federation of Small Businesses (FSB) has claimed.
The Conservative manifesto pledged to "review and reform entrepreneurs' relief" prior to the general election last December.
But Chancellor Rishi Sunak is believed to be considering scrapping the relief, after a comment made by Prime Minister Boris Johnson last month.
"It seems that the changes to entrepreneurs' relief could be more drastic and more imminent," Johnson said.
In response to that, the FSB has suggested keeping entrepreneurs' relief for the first £1 million of a business sale and "scaling it back at the top end".
Currently, the relief can reduce the amount of capital gains tax owed when business assets are sold or disposed of.
It results in a capital gains tax rate of 10% on the disposal, and can apply to gains of up to a lifetime limit of £10m.
Mike Cherry, chairman at the FSB, said:
"Scrapping entrepreneurs' relief would destroy the retirements of thousands of business owners and make a bad situation worse.
"The solution is obvious: keep the relief for the first £1m of a business sale and scale it back at the top end.
"Doing so would save the Treasury more than £1 billion and maintain a vital incentive which encourages entrepreneurs to startup, hire and invest."
The Spring Budget takes place after Prime Minister's Questions on Wednesday 11 March 2020.
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